In an extraordinary act of self-dealing, four members of the board of directors of Passport Health Plan, a nonprofit which provides care to the poor using public money, voted to lower a surplus on the books by paying large sums to the health care organizations they represented.
Describing this money shuffle as both illegal and improper, Attorney General Jack Conway announced last week that he's struck a deal to get $26.4 million back from the four member organizations involved, amounting to about 90 cents on the dollar.
Assuming the money is actually collected — some of the organizations have as long as four years to complete payment — this concludes the civil aspects of the case.
The most Conway would say in response to questions about whether his office is looking into criminal charges in the matter was, "I can assure you, we are doing our job."
Here's hoping that job includes working very hard to bring criminal charges that will stick.
There are so many things wrong with what happened that it's hard to know where to start. Consider:
■ At the time the transfers were approved, Passport had $77 million in excess funds while trying to negotiate fee increases with the state. By drawing down that huge balance, Passport was in a better position to get higher fees, state officials said.
■ $20 million of the money transferred was supposed to pay for care for people with no insurance. Instead, at least one of the organizations involved, University Physicians Associates, used it to pay for software, doctors' salaries and other expenses.
■ Under Kentucky law, non-profits can't pay any part of their income to their members. Additionally, Passport's own bylaws prohibited using its resources to enrich any of its members or directors.
■ Every dollar diverted to some other cause meant one of two things: people weren't getting care or the state was paying more for less.
In addition to UPA, the organizations involved are Norton Hospital, Jewish and St. Mary's Inc. and University Medical Center. The four were founding members in 1997 of Passport, a managed health care program to serve Medicaid patients in the Louisville area.
State Auditor Crit Luallen examined Passport last year at the request of State Sen. Tim Shaughnessy, D-Louisville. Luallen's scathing audit found questionable spending on travel, luxury resorts, expensive meals and gifts, among other problems.
Thankfully, many changes have been made at Passport since Luallen's audit was released, including bringing in new management and restructuring the board which had been made up almost entirely of representatives of the member health care suppliers.
Luallen and Shaughnessy deserve credit for bringing this mess to light.
Conway also gets a nod for recovering public money to care for poor Kentuckians.
But he shouldn't stop there.